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The high court has upheld an appeal by the Financial Sector Conduct Authority (FSCA) against a prior judgement that concluded a probe into former MD of Tongaat Hulett Developments Michael Deighton was unlawful.
After a hearing this week, a full bench of the High Court in Pretoria concluded that the failure to provide Deighton with documents was rational, given their sensitivity. It found that the prior court judgment failed to appreciate that a probe into his conduct was still at the investigation stage.
Deighton, along with other former executives, is facing criminal charges relating to an alleged multibillion-rand scheme involving sales of land owned by the sugar giant. In 2020, the FSCA instituted an investigation to determine whether any individuals were involved in the publication of false, misleading, or deceptive statements regarding the performance of Tongaat, a company which prompted SA’s second-biggest scandal after Steinhoff.
Early victory for Deighton
He scored a legal victory against the regulatory authority in 2022, with a Pretoria High Court judge ruling that a three-person panel, comprising Alexander Pascoe, Prinisha Pillay, and David Loxton, had treated Deighton unfairly. The High Court had reviewed and set aside the investigation, also ruling that if the FSCA restarted its investigation, it must do so with new panel members.
Deighton, in his application to the court, complained that the investigation, conducted through an interview, “offended his right to a fair and just administrative process”.
He complained that the panel members were biased and were refusing to give him documents to allow him to prepare for the interrogation. This led to a concern he was being subjected to “gotcha” questions based on complex transactions without being given access to the underlying documents.
Trouble brewing
However, the full bench of the court concluded that the prior judgment failed to distinguish between the investigative and adjudicative stages of the process. Deighton was afforded the representation of his lawyers, given fair notice of the interview, and furnished in advance with a detailed list of the 12 issues that were to be covered.
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He was informed of his rights, including against self-incrimination, while investigators afforded him the opportunity to consider each document put to him.
In addition, investigators expressed the willingness to adjourn the interview at his request so he could consult with his representatives.
“Applying the fairness standard at the investigation stage, the refusal to allow Mr Deighton prior access does not fall short of the standards demanded by the Constitution,” the judgment read.
It also overturned the ruling to remove the three investigators.
The FSCA’s view had been that it was at the investigators’ discretion to refuse prior access to the documents, and this had been valid. The investigation had been at a sensitive stage and disclosures could compromise it.
On Friday (9 February), the FSCA welcomed the judgment, including the approval of the procedures adopted by the investigators in the matter, especially as this is its standard investigation protocol.
